24 January 2022

When to move from on-prem to cloud PBX

When to move from on-prem to cloud PBX

Cloud PBX is becoming a buzzword in the business communications industry, but how does it differ from traditional phone systems and why should you care?

The NBN has changed the way many businesses operate in Australia. Fibre connections and satellite are helping to speed up communications by replacing copper wires and analogue systems. Traditional dial phones are giving way to voice-over-internet­-protocol (VoIP) systems, and the majority of communications now take place over the Internet.

This shift to digital gives businesses interested in upgrading their communications a huge range of new options – moving beyond traditional private branch exchange (PBX) systems to explore cloud-enabled options.

What is a PBX?

A PBX handles all call routing and switching within an organisation. The PBX connects the two lines in-house when you pick up the phone and dial an extension. This kind of on-the-premises (on-prem) PBX can only make external calls if it’s connected to either a public switched telephone network (PSTN) or a voice-over-internet-protocol (VoIP) network.

(NOTE: PSTN is a fancy name for all the infrastructure and services – including copper lines, fibre optic cables, microwave transmission links, cellular networks, communications satellites, and undersea telephone cables – that connects telephones around the world.)

On-prem PBX services are now being virtualised and migrated to the cloud. Here they function as a single instance, servicing one organisation and providing granular control over the environment. That being said, some service providers may offer other bolt-on services like Session Border Controllers as a shared service type arrangement to reduce costs. But at the core, these organisations are leveraging cloud infrastructure to host their telephony, deriving key benefits listed as “cloud PBX”.

What is cloud PBX?

The term “cloud PBX” is usually associated with multi-tenanted telephony services. The technology goes by several other names including “hosted PBX” and “cloud telephony.” As these names suggest, they involve a platform built and managed by external service providers who deliver multi-tenanted services made available on a per-user basis. While the client can control the service they receive, they are not generally in charge of managing the cloud platform or hosting environment.

So, where’s the hardware?

There are still servers and programs running your cloud PBX system, but those resources are usually located in a third-party data centre or inside an organisation’s private cloud.

Like many cloud solutions, one of the core factors that make them appealing to businesses is their impact on capital and operational expenses. Because cloud PBX does not require an organisation to purchase, power, cool, and maintain the bulky machines that run a PBX, your organisation can put these funds to other uses. What’s more, a cloud PBX can be set up quickly and reconfigured to allow for additional phone lines, roles, and call flows in minutes.

Plus, with the increasing availability of secure and reliable network connections, cloud PBX’s primary barrier to entry is shrinking.

Features you want from your PBX:
  • Auto-attendant – For guiding inbound callers or customers to the right person or department – no matter where they are.
  • Queues – Keeping a customer on hold while wrapping up a previous conversation.
  • Recording – Documents the content of phone calls for training, legal, or regulatory reasons. Cloud PBX enables call recording with remote and hybrid work arrangements.
  • Routing – For distributing calls to the right available person, regardless of location.
  • Software integrations – Depending on your setup, it’s possible to integrate APIs that securely forward calls and customer data to analytics tools, CRMs, or even helpdesk management suites. This automation improves system reliability while reducing the incidents of human error.
  • Transfers – For transferring a caller to a co-worker who can better resolve the issue the caller had contacted your business about.
  • Vanity phone numbers – A customised number sequence that is easy to remember and dial, you can use a vanity number to improve branding efforts and customer contact rates.
  • Voicemail – When you can’t answer a call, it’s good to know that your phone system will automatically record a voice message. It may even be able to forward messages as email using voice-to-text services.

Both on-prem PBX and cloud PBX solutions share many of the features mentioned here. However, one key factor that grounds all traditional PBX systems is that they must be located on the business premises to function.

This requirement isn’t the case with a cloud PBX. These systems can offer a more scalable, flexible way of conducting internal and external phone communications while controlling costs.

Business benefits of cloud PBX
Improved cost controls

When purchasing an on-prem PBX system, there’s a lot of hardware involved that can come with a high price tag. These systems also require space, maintenance, energy and cooling – not to mention maintenance and equipment updates. Cloud PBX solutions help control these expenses, as you can roll them into the operational cost of a cloud system. Cloud PBX does require decent internet connections and softphone licensing, but these are ongoing costs and can be treated the same as other operational expenses. This simplicity makes cloud PBX systems a little more budget-friendly than on-prem PBX systems, with fewer significant capital expenses.

Simplified maintenance

Like many other cloud-based systems, cloud PBX requires minimal on-site maintenance by the end-user or the client companies. For purely cloud-based phone systems, your VoIP provider should handle any upkeep tasks needed by your cloud-based phone system. These tasks include infrastructure upgrades, hardware maintenance, and software patching. If a system needs to go offline, your organisation’s PBX will still be available, as the cloud-based nature of the solution means that providers can provision and deploy backups and redundant fail-safes across their network.

Scalability and flexibility

As with other hardware-based solutions, on-prem PBX requires careful planning before purchase. Failing to anticipate future growth needs can leave your system struggling to meet future demands. On the other hand, spending too much on a system that is well beyond your needs can blow the budget. With cloud PBX, organisations can add or remove additional lines as their needs change. Most cloud PBX solutions support unlimited users and adding new phone numbers only requires a few clicks of a mouse. This scalability and flexibility make it a lot easier to connect new employees to a common platform with flexible accessibility, routing, and usage. They’re also flexible in terms of contracts and pricing – you can pay for what you need when you need it with monthly subscriptions instead of long-term contracts.


The digital nature of cloud PBX means that it can integrate well with a wide range of communication and management features, helping to make telephony even more useful. A cloud calling solution can support features such as instant messaging, desktop sharing, web conferencing, call recording, centralised reporting, and automatic call routing – making for a complete collaboration experience.

Cloud PBX and productivity

See how cloud with UC can improve employee experience and enhance productivity

Supporting collaboration – One key ingredient to more effective problem-solving is uninterrupted communication. Switching communications methods – say from calls to emails – can slow down cooperative work. A cloud PBX helps promote collaboration by bringing employees onto a single platform. By removing the need to support multiple communications solutions, staff can share their work directly, solving problems in a collaborative manner without needing to switch between multiple communications methods.

Location agnostic – One of the biggest features for cloud-based solutions is their accessibility. This feature is also a big selling point for cloud PBX, as the platform can help enable work on the road or from remote locations. Softphones and integrated messaging let employees work from anywhere in the world using a familiar and intuitive platform. If your business ever needs to expand or move locations, there’s no need to shift any physical setup – your PBX is already set up on the internet and available in a few clicks.

Improved geographic reach – While on-prem PBX systems can help keep track of who’s available in the office, it’s harder to automate these processes when dealing with a more distributed workforce. A cloud PBX system offers a simplified way for organisations to set employees up in hybrid work environments. While the employees may be geographically separated, the internet-based system lets them operate as a unified call centre – complete with auto-attendants, voicemail, and call distribution systems. In this way, a cloud PBX system makes it easier for businesses to overcome geographic boundaries to create a larger presence.

Cloud PBX Disadvantages

There are two apparent disadvantages to a cloud PBX system.

Cloud solutions require good Internet

For effective use of a cloud PBX, high-speed broadband is a must. Not just for the business but also for the staff. If your organisation operates in an area without high-speed Internet, call quality may suffer. As with all other cloud-based systems, hosted phone systems depend on reliable, fast Internet service to function well.

Security first

Cloud-based services can be more susceptible to security breaches than in-house systems because they’re connected directly to the Internet. Should a malicious threat actor find a weakness, they will exploit it. To overcome this, it’s imperative that you work with your cloud PBX provider to ensure you can both implement the multiple layers of cybersecurity needed to keep your cloud PBX secure. These include session border controls, SIP endpoint security, toll fraud detection, secure password management, updated firewalls, and suspicious activity monitoring.

The business case for cloud PBX

Several use cases make cloud PBX an obvious choice.

Contact centres – In the past, contact centres were well served by traditional on-prem PBX solutions. Their high call volume and localised employee distribution made the costs required by in-house telephony a sound investment. As time moves on and technology changes, those investments can still provide a return. But they may not offer the flexibility and scalability available through cloud PBX.

Growing organisations – New businesses and organisations experiencing sudden growth often need flexible and scalable options that enable support while controlling costs. Cloud PBX lets organisations of all sizes add new lines on the fly, only paying for what they need when they need it.

Distributed workforce – The COVID-19 pandemic helped reinforce the capacity of technology to enable new working models. Working from home or in a hybrid work model has become a preferred work mode for many organisations and employees. Supporting geographically disparate employees can help improve productivity and collaboration – not to mention staff morale and employee turnover.

High customer call flow – You don’t need to be running a contact centre to know that client calls can significantly impact customer satisfaction. Cloud PBX can help ensure incoming calls goes through to the right people, minimising time spent on hold and speeding up solution delivery.

How to select the right PBX option for you

On-prem PBX

  • On-site location means on-site security
  • Make use of initial investment in PBX equipment
  • Works best with on-site workforce
  • Can work with VoIP solutions

Cloud PBX

  • Overcome geographic distance
  • Control capital expenses
  • Gain flexible, scalable solution
  • Improved integration with third-party solutions

Choosing between on-prem and cloud PBX isn’t a decision that’s worth rushing. While some cases may seem clear cut, picking between the two isn’t a process you want to have to do twice.

While you should consider many factors during this process, the decision stems from two clear choices:

Control or flexibility?

If you need to be in absolute control over your phone system, including the hardware it’s hosted on, then an on-prem PBX is a good choice. While you wear the cost for installation, maintenance, power, cooling, staffing and space, you also gain absolute control over what the system does, how it integrates with other solutions and all other facets of managing these services. It does come at the cost of flexibility, as the capacity of the hardware will define what you can do with it. But with the correct setup and management, an on-prem PBX can serve an organisation well for years to come.

On-prem PBX makes it relatively easy to set up a range of security solutions for your phone system. These include session border control (SBC), a session initiation protocol (SIP) firewall, and security patches to protect against attacks. It’s also easier to regularly change passwords and disable unused phone numbers when you have a central control hub through a PBX.


One of the dominant features of modern business is the need to respond to change quickly. Cloud PBX offers improved flexibility across various areas, including costs, scalability, geographic distribution, innovation and collaboration. As with all things cloud, it does come at the expense of connecting your PBX solution directly to the Internet. But with the proper security arrangements, these solutions can become as secure as you need them to be.

Types of cloud PBX

Private cloud PBX – A private cloud PBX is dedicated solely to servicing one organisation. Private clouds provide enhanced security with physically isolated networks, computing, and storage layers. This security makes private cloud PBX a popular choice for organisations that want increased security. Performance levels are also typically higher with private cloud – but this comes with a higher price tag.

Public cloud PBX – A public cloud PBX shares its hardware with multiple clients in a connected computing environment. While each client’s data is isolated from the other clients in the public cloud, they all share the same pool of virtual resources. Public cloud is one of the most cost-effective options for hosting a PBX solution.

Hybrid cloud PBX – A hybrid PBX cloud solution involves utilising more than one cloud platform. It mixes on-prem infrastructure with both private and public cloud services. A hybrid cloud environment lets businesses access the benefits of both public and private cloud, along with any in-house infrastructure they may have on hand. This solution offers a greater level of agility in terms of prioritising critical workloads while relegating low-priority tasks to cost-effective infrastructure.

Conclusion: it’s time to migrate to cloud PBX

A lot of these articles end with a reasonably even-handed roundup at the end that highlights the pros and cons of the various solutions they cover.

Not this one. Not this time.

Cloud PBX is the future of telecommunications for organisations of all sizes. The NBN has done away with the need for purely analogue phone systems in Australia – they are no longer supported. This change means that old-school in-house PBX is only required if an organisation must have absolute control over their calling environment. A cloud PBX solution is the best option for all other organisations. It lowers costs, improves flexibility, and provides scalable access and improved integration for enhanced collaboration.

Get cloud PBX. Everyone else has. Why not you?